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EX1-freq-misssed - Economics 2006 Spring 2009 Exam 1[2]If...

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Economics 2006, Spring 2009, Exam 1 [2]If the unemployment rate is 8 percent, that means that 8 percent of 1. the population is not working 2. potential workers do not have jobs 3. the individuals who are looking for work cannot find jobs 4. people who want to work cannot find jobs 5. None of the above. See “Frequently missed questions, HW 1. [9]In the loans market the interest rate is above its equilibrium level. Given this fact which of 1-2 is true? 1. There is a surplus of loans. 2. There is a surplus of output. That is, full employment output is larger than the demand for output. 3. Each of 1 and 2 is true. 4. Neither 1 nor 2 is true. See your in-class notes in which I discussed how the interest rate will adjust to (i)clear the loans market and (ii)simultaneously to clear the output market. I discussed in class at around page 35 of the written, posted lecture notes. [18]In Freedonia there is a decrease in government purchases (with no change in taxes). According to the classical model, which of 1-3 will occur? 1. There will be an increase in the demand for loans (a curve shift). 2. There will be an increase in the equilibrium interest rate. 3. There will be a decrease in equilibrium planned investment.
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